Mr. Duterte schools Mr. Aquino on economics

Everybody, save for some multilateral institutions, is bullish on the yearend report from the country’s economic managers, though that would be several months away. Barring an Intensity 7 earthquake, or Yolanda-scale winds savaging the economic centers, a 6.8 percent GDP growth appears to be a very conservative target. It could be 7 percent or higher. Across all economic sectors, enthusiasm and energy are the operative words.

The projection of the multilaterals of a 6.4 percent growth for this year appears pessimistic.

Even laymen can rattle off the reasons why.

The two-stop shop of the Philippine economy, the acronyms OFW and BPO, have been holding steady, which means consistently growing and defying all the premature prognostications of their entry into regression territory.

Mr Duterte’s big words on a manufacturing renaissance are music to blue collar ears like mine. The “renaissance” is good rhetoric but will not happen in the real world. The drivers are the two acronyms.

The BPO sector is unaffected by Mr. Trump’s nativist and protectionist rhetoric. All his tweets on rescinding trade agreements and bringing offshore jobs back to the US are as faulty as his doomed Trumpcare. The scary part on the BPO issue is India’s efforts to grab the network engineering and tech support jobs from the locals by bidding low. But the hopeful sign is this. After a BPO giant laid off more than 100 network engineers and support staff after an offer from an Indian tech company, all the more than 100 got better jobs, with pay increases of anywhere from P30,000 to P50,000 a month in their new jobs. The room for growth and the advancement opportunities for those with desired skill sets are amazing.

There is no reason to doubt the uber optimistic scenario written by the BPO people.

When the price of crude dropped to $30 per barrel or so several months ago, the scenario laid down by the naysayers was the collapse of the OFW remittances. Our OFWs answered back with steady, if not higher, remittances. Remittances this year will not only be better than last year. Even the hard currency sent via the informal channels not monitored by the BSP are expected to buy anywhere from $1 billion to $2.5 billion higher.
Talk about the indomitable spirit of the Filipino diasporas.

Playing their roles as the gifts that keep on giving to the hilt, the two acronyms boost every sector across the board: retail, real estate, finance, tourism, education and the automotive industry. The predisposition of OFW and BPO families to spend (splurge is the term) is the infectious force that is behind the high level and sustained consumer spending. When the market is vibrant and there are no foolish policies that curb the enthusiasm, sustained GDP growth is the net result.

What truly astounds the outside world is that scoring high on GDP growth (we may be the best performer in Asia this year) has never been the agenda of Mr. Duterte. He is focused on his war on drugs, a bloody, determined resolution to wipe out every drug dealer in his country, and, if the drug addicts got in his way, so be it. Mr. Duterte, in the pursuit of his war, has been scornful of every person and entity that has been critical of his war.

Mr. Obama, Mr. Goldberg and Mr. Ban Ki Moon got the first salvo of Mr. Duterte’s cussing. When they were gone from the scene, it was the bishops and multilateral institutions (UN) and the foreign political entities, (the European Union, for example). In theory, such defiance of the world’s influential political and multilateral institutions is drag on the economy. Yet, the economy is unaffected, as if the Duterte administration were a master of compartmentalization – the tough words of the president are separate from the engine of the economy.

Something along this line is, indeed, what is happening. The economic policies are left to the economic team and Mr. Duterte, other than paying nominal paean to growth, is unconcerned about growth. Mr. Duterte has the fortune of having an economic team that is more orthodox, more conservative than Mr. Aquino’s.

The robust economy, in many ways, is Mr. Duterte’s way of exposing Mr. Aquino’s long play-acting as a so-called “technocrat-wonk.” Mr. Aquino’s leadership, it turned out, had nothing to do with six long years of growth. The combative Mr. Duterte, whose favorite sentence is “I will kill you,” is poised to achieve better growth charts than Mr. Aquino despite his lack of attention to achieving growth.

It turned out that a president can even theoretically do things to harm growth but the theoretical side will still be trumped by fundamentals such as the good showing of the two acronyms, OFW and BPO, the true economic drivers.

It is still premature to assume that, on the issue of growth, Mr. Duterte will score better than Mr. Aquino. But the overall bullishness — amid EJK and Mr. Duterte’s bombastic rhetoric and his lack of attention on economic issues — suggests that it was not Mr. Aquino’s policies and mantra of “GDP, GDP” that drove the growth during his six years in office.

Mr. Aquino just rode on the indomitable spirit of our global diasporas and the inexorable march of the BPO sector into a hard currency – generating tsunami.

Mr. Aquino, as DU30 has clearly demonstrated, was just playacting as a leader. The label “technocrat-wonk” was undeserved.

16 Comments

We have to thank Gloria Arroyo for our economy. It takes at least 10 years for any positive change. A few months from Duterte is not responsible for our good economy look at China, it took 20 years for their economy to grow.

only those who choose to be blinded by their loyalty to colored partisan cannot believe and understand what the present administration is doing, and yet they are getting the biggest share of the benefits.

I wish more people would remember that PGMA was responsible for bringing the RP through some tough times when the country weathered the world financial banking crisis namely from the US Subprime mortgage and housing bubble that burst around 2004, it caused the the PhP to devalue 56+ to 1 $US (BSP data). Yet ever the economic manager PGMA left office in 2010 with a legacy feat of strengthening the PhP 45+ to 1$US. No RP president succeeded in revaluing our currency by 10+ none except Gloria Macapagal Arroyo.

Yet here are yellow media maligning her as much as they did Marcos. It was the strong fiscal reforms of PGMA that benefited PNoy’s presidency. In reverse Midas effect, PNoy’s DAP corruption and incompetence of the yellows squandered these hard won economic gains so the PhP is back to 50+ to 1 US$.

OFW started from Ferdinand E. Marcos and BPO started from Gloria M. Arroyo. These two presidents are hated very much by the Yellowtards. Other presidents were riding on these accomplishments, except DU30, he admired and acknowledged them.

If people will just stop hitting Trump for his nationalistic rhetoric and put it into perspective, they will understand that most nations would like to put their citizens first than the citizens of other countries. I understand why Trump why many states voted for Trump. Imagine if your jobs were outsourced overseas or if you job was given to China, how would you feel? Imagine if people from China, Indonesia, Thailand and Vietnam can come here and get jobs that should be for Filipinos because the former will just accept a lower wage than Filipinos? Imagine if you have to pay more in taxes so that the bums who prefer not to work can get healthcare. That is what is happening in the US. US citizens got their jobs outsourced, transferred to China, and taken over by illegal aliens. Then Obamacare made it mandatory to pay more into the insurance system so that even the undeserving lazy bums can get healthcare since the know how to work the system. And that is why my brothers in the US are wary of the lazy bums in the US because they are the ones working and these bums are the ones getting welfare and everything for free just for being black or Hispanic, not all but many of them compared to Asians who live and work in the US.

Gloria Arroyo the master economist laid the solid foundation for the Philippine economy during her term. The administration of Aquino just rode on these foundations and did not do anything different. The economy during Aquino’s time would have taken off for the Filipinos but because Aquino is a haciendero his mentality is that the very few, very rich should benefit from the growing economy and the ordinary people who comprise the other 99% can just fight over the crumbs. His mother had this same mentality of the outmoded and long discredited “trickle down economics”. From the start it is obvious that the Duterte administration does not believe in the trickle down economics. Instead, the tools of prosperity are systematically being handed down to the countryside with support from all areas of government. There is free irrigation and mechanized implements for farmers, free boats for fishermen, affordable and available credit for all, free education in all state colleges and universities, free universal healthcare, significant salary raises for police, soldiers, and other government employees, raise in SSS pension for seniors. A massive infrastructure buildup is underway that will provide many employment opportunities. Contrast this to Noynoy Aquino’s administration where over a hundred billion was stolen from the budget and used for bribes to impeach Chief Justice Corona, two hundred container vans disappeared from customs, residents, tourists and balikbayans were victims of tanim bala at the airport, the crime rate tripled, the national penitentiary became the biggest trading ground for crystal meth (shabu), and the Philippines became a narco state.

For the uninformed like myself, the acronyms GDP, OFW, and BPO should have been spelled out at first. The Gross Domestic Product (GDP), the Overseas Filipino Workers (OFW) have been mentioned everyday in the national dailies so many understand the meaning of the acronyms, but BPO is one that is seldom in the news, thus its meaning is unknown to a lot of readers.

BPO stands for business process outsourcing, the kind/nature of which are tackled by those entities popularly referred to as ‘call centers’ where the Filipinos provide the labor side in the supply chain without leaving the country.

@Red Tiger, @ VICTORTS does have a point. Like you, most mistake BPO as ‘call centers’ only. Which is why every time someone asks me “Sa’n ka nagtratrabaho?” I answer “Sa [Software companyname], BPO.” they say “Ah, call center ka!”. I have nothing against call centers, I just feel bad that teams behind website development get lopped with online clerical work. To save me the stress of having people understand, I just say “Gumagawa kami ng website.”

The Philippines has more to offer in terms of web development, kulang lang tayo sa paghabol sa worldwide standards. India have developed creative generations, we have only developed an innovative ones.

Which is why BPO should be spelled out AND acknowledged not only as call centers but as web development, medical transcription, software engineering,game development, back-office service.

Why? So kids know they have more to opportunities to choose from- not just fall back employment. We have to realize, 2 generations are primed for BPO work already, the coming generation Gen Alpha will be the first generation that will not know anything of manual nature. Let’s develop a highly competitive generation who are creative and innovative by broadening our own perspective on what is happening around us.

Since when do we discredit an administration for achieving a remarkable growth in the economy. Duterte may out perform PNoy in terms of GDP growth but isn’t it too early to tell? Doesn’t PNoy or his economic advisers including CB Tetangco deserve some credit for shepherding nthe economy to new highs during their term? What has Duterte done since July 2016 for the OFW and BPO anyway, if they are the major determinants of growth. Evaluations of PNoy and Duterte’s economic performance are better left to qualified economists and institutions rather than columnist who makes apple to orange comparisons. How about the devaluation of the peso vis-a-vis the dollar and the negative balance of payments under the new administration?

some economists are of the opinion that the peso is over-valued.
thus a devaluation is beneficial in the long run as our exports will generate a larger market (since the price of our exports in the international market will make it more competitive).
the corollary effect of the rising costs of imports will help restrain the importation of luxurious or items which are not urgent or necesseary within a certain time frame.

the result of such a scenario will eventually even out the trade deficit

I have just a few thoughts to add to your piece. The current administration has positioned the country to really take-off in a number of ways. These have the potential to eclipse the BPO and the OFW sources of income in the long run.

At a global level, the realignment of foreign policy has opened new doors to foreign investment. Huge new sources of capital are being tapped into from China and Japan. These are likely to spur infrastructure development, create a boom in the construction industry and create jobs for the working class.

At a regional level, the administration seems to be working hard at boosting ASEAN connections and markets. It seems that markets for agricultural produce are being opened and that should bode well for agriculture. The country seems to be trying to transform agriculture with improved access to technology, markets, and capital to really move ahead.

At the national level, the administration is clearly not Manila-centric. Development is proceeding nation-wide and if Mindanao starts to take-off, it is likely to really help stabilize the region and help bring about peace through economic development and integration.

The war on drugs and corruption seems to be the toughest fight of all. But it may be the most important. Corruption may be the greatest barrier to change. I am not an anti-Aquino person. I thought some of his economic policies made sense. The difference to me is that the current administration is like a whirlwind that is attacking problems on all fronts with an intensity that makes previous administrations look like they were moving in slow motion. Peace and public safety are important aspects if the tourist industry is to grow as well.

Perhaps the president is not an economist. But the administration seems to have a good understanding of what needs to be done and seems to be trying to do it at a rapid pace. When I look at the future for my children, I am quite hopeful that they may be growing up at a time when the country is entering an economic renaissance.

When moving at such a pace, mistakes will occur. But the net benefits to the country should be huge. Let the media dwell on the mistakes, but those of us who live on the streets have our eyes on the larger prize.